Cohu, Inc. (COHU) Message Board

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Technology Stocks : Cohu, Inc. (COHU)

COHU 24.31

+1.1%

Nov 28 12:59 PM EST

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To: Eric Lee Smith who wrote (1164)	1/31/1999 4:02:00 PM
From: KLINVESTOR	Read Replies (2) of 7827

Eric, In regards to your thought about Cohu being a buy to $37 and a sell at $62 I think it is to early to tell. At this juncture we have made up a lot of ground that we lost over the past 6-9 months but the "potential" for a much higher price exists. The reason I say that falls around two issues those being other semi-equip stock prices and the other being the severe underinvestment in semi-equipment over the past year or so. I for one have felt that Cohu for the past several years has been significantly undervalued versus other semi-equip companies. Seldom do you see a company that so dominates it niche trade at such a low PE and PSR. The company management while conservative (which can be good) can be held somewhat responsible for that. There was very little attention paid to the investment community previously but they have significantly improved that. There are 4-5 analysts which cover Cohu now whereas as last year about now there was only 1-2. They other reason that Cohu trades at this discount is the perception is they are probably lower tech than say TER and AMAT. Of course being lower tech does not mean lower profitability and a recognition of their focus on the bottom line will certainly be noted over time. TER at present trades at about double the price of COHU and their respective share prices tracked one other quite well until 3-4 months ago. While TER is doing well now COHUs recent quarterly release gives me the comfort that COHU will make up the ground vs. TER pretty soon. So in setting any price target I would keep an eye on TER and other semi-equips and most importantly semi-conductor demand and prices. The semi-conductor pricing leads me to the second big issue to keep an eye on. The semi-equipment sector has seen significant underinvestment over the past 12-18 months. As demand begins to bounce back and semi-conductor demand continues to grow I think we will see a significant increase in semi demand leading to semi-equip demand increases. Semi-equipment becomes obsolete very quickly and I think all the equipment companies benefit from that. Therefore, I think this next bounceback in demand will be longer and stronger than most expect right now. Therefore it is difficult to pick the next peak price but if Cohu gets the recognition they deserve and the next cycle is as strong as I am guessing I think something in the $60-100 ranges is possible. I also still would not discount the possibility of Cohu being an acquisition target of TER, HP, or other back-end company which would also push the price up substantially. Good luck to all!

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